Finance & Banking

Last updated: Wednesday, February 21, 2018

Effects from Bank - Business Connectivity

Posted: Tuesday, November 01, 2016

Total deposits of the banking system in Hoa Binh province reached VND10,874 billion in the first nine months of 2016, up 17 per cent from December 31, 2015 and 8.1 per cent over the same period of 2015. Total credits valued VND14,635 billion in the period, up 13.2 per cent over December 31, 2015, of which agricultural loans accounted for 65 per cent of total loan value. Credit funds have been key contributors to supporting production and business activities of local enterprises and households to boost local social and economic development. To learn more about achievements of the banking sector in Hoa Binh province, Vietnam Business Forum Magazine has an interview with Mr Bui Van Xuong, Director of the State Bank of Vietnam (SBV) - Hoa Binh Branch. Ngo San reports.

Could you share about the bank - business connectivity results of the province in recent years?

To carry out directives of the Government in Resolution 35/NQ-CP on business support and development to 2020 and the Directive 04/CT-NHNN dated May 27, 2016 of the State Bank of Vietnam on some solutions to monetary regulation and banking operation in the last few months of 2016, the banking sector of Hoa Binh province will continue to effectively implement the bank - business connectivity programme for local banks and the business community in 2016.

The banking sector has supported local enterprises to overcome hardships and share support and advice on investment and business development with them; lent to local firms to boost production consumption and provided services to help them enhance the efficiency of using business capital.

In 2015, banks provided loans, increased credit limits, restructured debts and reduced interest rates for 719 customers with VND994 billion according to the bank - business connectivity programme. Lenders granted new loans, raised credit lines of VND741 billion for 604 borrowers, and restructured VND253 billion of outstanding debts for 115 customers. They prioritised collecting principal first and interest later for clients with good development prospects.

How has SBV - Hoa Binh Branch guided local commercial banks to support local business in the past time?Outstanding loans of local banks reached VND1,665 billion in the first nine months of 2016, up 1.7 times over the end of 2015. Interest rates of corporate loans are always 1.5 - 2 per cent lower than ordinary interest rates. Short-term loans carried an interest rate of 7 - 9 per cent per annum and medium and long-term loans bore 8.5 - 10.5 per cent. Specially, companies categorised in priority sectors and given good credit ratings by commercial banks are offered a preferential interest rate of 5 - 7.2 per cent per annum.

The bank - business connectivity programme has promoted positive effects in supporting enterprises to boost production and business activities, helping them to reduce financial costs relating to borrowing costs, strengthen financial health, restructure production and operations, expand operations, and increase investment opportunities. Besides, the programme has helped the local banking sector to achieve effective credit growth objectives, enhance the autonomy and accountability of commercial banks to the business community and share difficulties with businesses.

Besides, practical information about support policies of the Government and the State Bank of Vietnam has reached enterprises, thus helping more and more companies to access business support policies of the Government and the SBV. Moreover, the programme has enabled local businesses to understand their responsibilities, rights, interests and obligations in credit relations with banks.

However, some businesses reportedly find it hard to access bank loans because most of them have small operating scale and their operations mainly rely on bank loans. Due to limited governance capacity and insufficient proof documents, they lack confidence of lenders in assessment processes. Therefore, companies must enhance their governance and have viable business plans and financial reporting transparency.

At a meeting on banking tasks in the last months of 2016, the director of SBV - Hoa Binh Branch directed local credit institutions to speed up the implementation of the bank - business connectivity programme; and carry out troubleshooting solutions for enterprises and consider effective lending to ensure safe credit growth. The branch has integrated the bank - business connectivity programme with the process of executing credit plans of every local bank and credit institution. Local lenders have actively sought customers qualified for the bank - business connectivity programme, approached reputable businesses with good production and business plans, and expanded the scope of the programme to benefit more sectors and fields.